Hubby soon to be laid off

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
starfish26
Posts: 4
Joined: Thu Sep 20, 2018 11:11 am

Hubby soon to be laid off

Post by starfish26 » Thu Sep 20, 2018 1:07 pm

Hi All,
Long time lurker and haved loved reading and learning from this group and WOW have I learned a lot. I thought we were doing OK. Transferred everything to Vanguard a few years ago except my husband's work 401K. Maxed out our HSA for the last few years and treated it as investment. Contributed to my Individual IRA etc. Just found out last night my husband will be laid off at end of October. Need some advice: we thought we were on track to retire in 2 years. I think this will set us back depending on him getting a new job
I'm 64 and self-employed making $30-40,000- this will probably stay pretty constant
He's 65 and makes $100,000
Finances:
$50,000 in an emergency fund
$26,000 in an HSA
$175,000 in taxable accounts invested at Vanguard
$915,000 in retirement accounts for both of us mostly Vanguard except his current work 401K that's at Fidelity

Mortgage PIT is $2800/month @ 2.5% will be paid off in 4.5 years. We refinanced 5 years ago to a 10 year mortagage to pay off quicker. Homeowners insurance is additional 300/month. Owe $120,000 and house is worth $700,000+

No other debt: Own 2 old cars that work great. I work out of house and husband has worked remote for the past 5+ years. Car insurance for both cars about 100/month
No credit card debt

We have Long term care insurance that costs about 6500 year for both
we both have life insurance- he has 2 private policies of 600,000 coverage combined. I have 100,000 policy

My husband is 65 and could now sign up for medicare, but we now contribute to HSA- How will this affect it?
I am not eligible for Medicare till next summer- I will need to buy insurance on the healthcare.gov site. Yikes! 800-900/month when I looked this morning for a single policy.

Should we refinance our mortgage for a longer term to lower our costs?

I know nothing about Medicare and what to buy for the other parts we need? Help?
Should I drop some of life insurance?
We live in HCOL area and will be staying here. My job depends on it. And we've been here forever: live in the northeast
We were not planning on taking Social Security until he was at least 67 and I was 66- 2 more years. He would get $2625/month at that time and I am eligible for $950 on mine at 66 years but would take 1/2 of his instead when I turn 66?

Of course, if he gets a job, we would be OK, but that is not guaranteed because of ageism. He will get 6 weeks severance. We at least have a little time to figure this out.
Any advice on mortgage, insurances, Medicare, retirement is greatly appreciated
Thanks

emoore
Posts: 476
Joined: Mon Mar 04, 2013 8:16 pm

Re: Hubby soon to be laid off

Post by emoore » Thu Sep 20, 2018 1:38 pm

How much do you estimate you need in retirement? I think you need to make a budget. You don't seem in that bad of shape. the $2800 mortgage is tough though. Can you sell the house and downsize? You have over $500k in equity so maybe you can buy a smaller house.

Broken Man 1999
Posts: 1513
Joined: Wed Apr 08, 2015 11:31 am

Re: Hubby soon to be laid off

Post by Broken Man 1999 » Thu Sep 20, 2018 1:45 pm

Sorry to read of your family's problems. Sucks!

Will you husband be eligible for unemployment benefits? Hopefully short time if husband finds another job.

Why is he being laid off? Problem of company, or industry? Will there be opportunities for him in his field?

Does he have a college degree? Could he teach school for a couple of years? Just brainstorming.....

What does it take to run the household for a month? Is it possible to reduce spending?

Over the years I found I allowed our spending to get larded up, so in some cases one can find relatively easy ways to trim the budget.

Are you in your "forever" home? Would it be possible to downsize into something smaller? If you can downsize you might be able to stay in your area but cut your living expenses.

Others will chime in, but if you are as close as you say to retirement, I think you can pull this out.

Good luck!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Hubby soon to be laid off

Post by Thesaints » Thu Sep 20, 2018 1:45 pm

You've got a little more than a million of capital and you both are still relatively young. The life expectancy at that age is around 20 years, but that's just the average. It would be prudent to budget double that.

The present situation with low yields is the most unfavourable and, combined with the long time in retirement, would make prudent to budget for a safe withdrawal rate of 3%. In two years SS payments will take care of your mortgage, but can you live on ~30k/year ?

Alternatively, you could get an annuity, which would pay around 6.5%.
Finally, there is the option of a reverse mortgage and cash in your home equity.

barnaclebob
Posts: 3028
Joined: Thu Aug 09, 2012 10:54 am

Re: Hubby soon to be laid off

Post by barnaclebob » Thu Sep 20, 2018 2:06 pm

Sounds like you could go down to one car. This will save you money now and then in retirement.

If he get unemployment benefits then you might be close enough to retirement by the time those end to not worry about it.

aristotelian
Posts: 4767
Joined: Wed Jan 11, 2017 8:05 pm

Re: Hubby soon to be laid off

Post by aristotelian » Thu Sep 20, 2018 2:07 pm

No offense, but why stay in a HCOL area for a job that only pays $30-$40K? Sell the house and that $120K mortgage becomes $200-$300K cushion for your portfolio.

You don't say what your expenses are. Personally, I think you are in excellent shape to retire. If you both claim SS today, you could pull $40K annually from your portfolio on top of $36K from SS. You can probably optimize further by claiming later. Unless your expenses are dramatically over $75K, I would not be stressing about finding work at age 65.

Jags4186
Posts: 2538
Joined: Wed Jun 18, 2014 7:12 pm

Re: Hubby soon to be laid off

Post by Jags4186 » Thu Sep 20, 2018 2:13 pm

If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.

riverguy
Posts: 439
Joined: Sun May 23, 2010 10:33 pm

Re: Hubby soon to be laid off

Post by riverguy » Thu Sep 20, 2018 2:24 pm

Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.

jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 2:26 pm

Re: Hubby soon to be laid off

Post by jehovasfitness » Thu Sep 20, 2018 2:32 pm

Would have to agree, 3600/yr for homeowner's insurance sounds crazy high

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Hubby soon to be laid off

Post by Thesaints » Thu Sep 20, 2018 2:34 pm

riverguy wrote:
Thu Sep 20, 2018 2:24 pm
Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.
A 120k mortgage could very well cost that much. The OP number comes from having a 10-year mortgage, maybe that's also something which should be changed.
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
and that too.
Last edited by Thesaints on Thu Sep 20, 2018 2:36 pm, edited 1 time in total.

runner540
Posts: 753
Joined: Sun Feb 26, 2017 5:43 pm

Re: Hubby soon to be laid off

Post by runner540 » Thu Sep 20, 2018 2:36 pm

jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
It's about 0.5% of the value. Is that high?

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Hubby soon to be laid off

Post by Thesaints » Thu Sep 20, 2018 2:38 pm

runner540 wrote:
Thu Sep 20, 2018 2:36 pm
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
It's about 0.5% of the value. Is that high?
What coverage do they have ? My insurance is a little more than 1k for double the value. Of course land value is not insured, but I can't see how the OP valuation may be almost all buildings.

User avatar
unclescrooge
Posts: 2598
Joined: Thu Jun 07, 2012 7:00 pm

Re: Hubby soon to be laid off

Post by unclescrooge » Thu Sep 20, 2018 2:41 pm

runner540 wrote:
Thu Sep 20, 2018 2:36 pm
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
It's about 0.5% of the value. Is that high?
Yes.

jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 2:26 pm

Re: Hubby soon to be laid off

Post by jehovasfitness » Thu Sep 20, 2018 2:49 pm

runner540 wrote:
Thu Sep 20, 2018 2:36 pm
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
It's about 0.5% of the value. Is that high?
FWIW in Maryland our last house value at time was $180k and paid $700/yr

we moved to a lower crime rate area with house value $350 and pay $650/yr

$3k deductible IIRC

delamer
Posts: 6263
Joined: Tue Feb 08, 2011 6:13 pm

Re: Hubby soon to be laid off

Post by delamer » Thu Sep 20, 2018 2:50 pm

emoore wrote:
Thu Sep 20, 2018 1:38 pm
How much do you estimate you need in retirement? I think you need to make a budget. You don't seem in that bad of shape. the $2800 mortgage is tough though. Can you sell the house and downsize? You have over $500k in equity so maybe you can buy a smaller house.
Agreed.

You gave us information on parts of your expenses but not the whole picture. You need to identify both your fixed expenses and your variable expenses.

Ultimately, it is a question of how your total expenses compare to your income.

A safe withdrawal rate from your investments is about $40,000, plus you have your work income. So say $75,000. And Social Security coming up too. You will get half of his amount at his full retirement age if you wait until you are at your full retirement age to claim.

Does the $2800 include escrow for taxes? If so, what portion? Apparently insurance is separate.

It might be difficult to do a refi without your husband’s income. But you certainly could lower your monthly payment with an extended mortgage (15 or 30 years) even with a higher rate.

You are likely eligible for COBRA coverage through your husband’s job that will last for 18 months which would take you to Medicare. It is probably better coverage than what you’d get from the marketplace.

Your husband probably doesn’t need that much life insurance, but again it depends on your total expenses.

Sorry about this wrench being thrown into your plans.
Last edited by delamer on Thu Sep 20, 2018 2:58 pm, edited 1 time in total.

barnaclebob
Posts: 3028
Joined: Thu Aug 09, 2012 10:54 am

Re: Hubby soon to be laid off

Post by barnaclebob » Thu Sep 20, 2018 2:51 pm

aristotelian wrote:
Thu Sep 20, 2018 2:07 pm
No offense, but why stay in a HCOL area for a job that only pays $30-$40K? Sell the house and that $120K mortgage becomes $200-$300K cushion for your portfolio.
I don't know why this is always such a common suggestion on this forum. Many people really like where they live and moving is a huge expense along with the hassle. OP is a long way away from needing to move just to pad their portfolio.

The last thing I plan on doing in the house I currently live in is falling down the stairs.

delamer
Posts: 6263
Joined: Tue Feb 08, 2011 6:13 pm

Re: Hubby soon to be laid off

Post by delamer » Thu Sep 20, 2018 2:53 pm

Thesaints wrote:
Thu Sep 20, 2018 2:34 pm
riverguy wrote:
Thu Sep 20, 2018 2:24 pm
Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.
A 120k mortgage could very well cost that much. The OP number comes from having a 10-year mortgage, maybe that's also something which should be changed.
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
and that too.
The amount of the outstanding mortgage has no bearing on the cost of insurance.

Unless you were referring to the mortgage payment rather than the insurance?

I couldn’t tell from your statement.
Last edited by delamer on Thu Sep 20, 2018 3:08 pm, edited 1 time in total.

User avatar
jharkin
Posts: 1869
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Hubby soon to be laid off

Post by jharkin » Thu Sep 20, 2018 2:54 pm

At a quick glance it doesn't seem so bad. You probably have something like:

$30-40k from your income
$36k from SS
$40-45k from investments ($1.1M using 4% rule)

That's over $100k a year until you stop working (remember once you are FRA you can take SS without reduction from your job income), then dropping down to about $75k per year.

Do you really need the 700k house? I live right outside Boston and my MIL downsized to a 250k condo when she retired and lives comfortably. I bet if you sold and bought a smaller house just with the sale proceeds you could cut your fixed expenses by a third or more and make the above numbers work comfortably. Then its just a matter of scraping by 1 or 2 lean years until you claim SS (if your husband eligible for unemployment?)

Agree the HO insurance is high, but not insane depending where you live. We pay 1100 on 350k coverage.
I would drop the life insurance.

aristotelian
Posts: 4767
Joined: Wed Jan 11, 2017 8:05 pm

Re: Hubby soon to be laid off

Post by aristotelian » Thu Sep 20, 2018 2:56 pm

barnaclebob wrote:
Thu Sep 20, 2018 2:51 pm
aristotelian wrote:
Thu Sep 20, 2018 2:07 pm
No offense, but why stay in a HCOL area for a job that only pays $30-$40K? Sell the house and that $120K mortgage becomes $200-$300K cushion for your portfolio.
I don't know why this is always such a common suggestion on this forum. Many people really like where they live and moving is a huge expense along with the hassle. OP is a long way away from needing to move just to pad their portfolio.

The last thing I plan on doing in the house I currently live in is falling down the stairs.
She said the reason they are staying is for her job. I am just pointing out that the income from her job is offset by the expense of their house. If they want to stay for other reasons, they should own that decision and not pretend that it makes financial sense to do so. Personally, I would not work longer just to sustain a HCOL lifestyle.

HornedToad
Posts: 890
Joined: Wed May 21, 2008 12:36 am

Re: Hubby soon to be laid off

Post by HornedToad » Thu Sep 20, 2018 3:04 pm

riverguy wrote:
Thu Sep 20, 2018 2:24 pm
Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.
That's about what I pay as well for house value of $700k (ignoring land). $~700/yr.

Jags4186
Posts: 2538
Joined: Wed Jun 18, 2014 7:12 pm

Re: Hubby soon to be laid off

Post by Jags4186 » Thu Sep 20, 2018 3:07 pm

runner540 wrote:
Thu Sep 20, 2018 2:36 pm
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
It's about 0.5% of the value. Is that high?
I pay 0.15% of the value on insurance.

Jags4186
Posts: 2538
Joined: Wed Jun 18, 2014 7:12 pm

Re: Hubby soon to be laid off

Post by Jags4186 » Thu Sep 20, 2018 3:08 pm

Thesaints wrote:
Thu Sep 20, 2018 2:34 pm
riverguy wrote:
Thu Sep 20, 2018 2:24 pm
Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.
A 120k mortgage could very well cost that much. The OP number comes from having a 10-year mortgage, maybe that's also something which should be changed.
jehovasfitness wrote:
Thu Sep 20, 2018 2:32 pm
Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
and that too.
Not sure you followed me—she should refinance from a 10 year to a 30 year. Her payment will drop approximately 66%.

dcabler
Posts: 650
Joined: Wed Feb 19, 2014 11:30 am

Re: Hubby soon to be laid off

Post by dcabler » Thu Sep 20, 2018 3:13 pm

Do you know if your husband will receive a severance package as part of the layoff? I was laid off in 2012 at a company I had been at for over 22 years and the package was substantial - it definitely accelerated my retirement plans. If so, might it be enough to get you guys close enough?

riverguy
Posts: 439
Joined: Sun May 23, 2010 10:33 pm

Re: Hubby soon to be laid off

Post by riverguy » Thu Sep 20, 2018 3:14 pm

HornedToad wrote:
Thu Sep 20, 2018 3:04 pm
riverguy wrote:
Thu Sep 20, 2018 2:24 pm
Jags4186 wrote:
Thu Sep 20, 2018 2:13 pm
If you want to stay, refinance your mortgage to a 30 year. That will cut your mortgage payment by 1/3 even with a higher interest rate. Let your heirs pay off the mortgage when they sell the house. If your husband gets another job you can aggressively pay it off. If you go that route the extra interest won’t be that much.

Also, shop for home owners insurance...$3600/yr seems awfully high. I pay $772/yr.
You pay $772/yr on a $700,000 house? I don't believe it.
That's about what I pay as well for house value of $700k (ignoring land). $~700/yr.
Probably live in a place with no hail or storms? Roof replacement is the biggest driver of that cost.

User avatar
Meg77
Posts: 2409
Joined: Fri May 22, 2009 1:09 pm
Location: Dallas, TX
Contact:

Re: Hubby soon to be laid off

Post by Meg77 » Thu Sep 20, 2018 3:18 pm

It sounds like you guys are doing pretty well. In fact this could be viewed as a bit of an opportunity. I wrote out a whole post but am deleting it because I came around to what I think is a better idea for you guys.

1. Use your taxable investments to pay off the mortgage. You'll still have 6 figures in cash/taxable brokerage, and your monthly expenses will drop significantly. Plus when (not if) the stock market corrects, you will sleep better at night knowing you sold near the highs to pay off your last liability and facilitate an earlier than expected retirement.

2. If you can't stomach pulling the trigger on that recommendation, leave the savings there and draw it down slowly as needed to pay the mortgage. Don't refinance! You have a great rate, and paying the home off by age 70 is prudent anyway. By then you can hopefully live off social security and your portfolio, especially without the mortgage.

3. I'm not sure he *needs* another job, at least not another job in the same field earning 6 figures - especially with the mortgage gone. It won't hurt to look, but if you were planning on him retiring in 2 years anyway I'm not sure it's worth the hassle to look for and get another similar job (stressful process) and get acclimated to a new environment and employer (which can take about a year and also comes with extra effort/stress). Besides it's a bit unfair to the potential new employer to retire promptly once you really get used to the new gig and start making a real contribution. That doesn't mean there aren't part time or other jobs he could do to bring in some extra cash of course, if you need/want that extra cash flow. But you could make it work with what you've got coming from your income and unemployment/social security as well.
"An investment in knowledge pays the best interest." - Benjamin Franklin

billfromct
Posts: 775
Joined: Tue Dec 03, 2013 9:05 am

Re: Hubby soon to be laid off

Post by billfromct » Thu Sep 20, 2018 3:30 pm

I believe your husband has 3 months to apply for Medicare Part B, after the month he turns 65 without proof that he currently has other health insurance.

If it is over 3 months past his 65th birthday month, he will need form CMS-L564, Verification of Employment documenting he has health insurance. He can fill out the form on line, print it out, then the company HR department must fill in the rest stating he has health insurance & sign the form. He will have to bring this signed form with him when he applies for Medicare Part B.

If he is within that 3 month window after his 65th birthday, then he does not need the form to sign up for Medicare Part B.

He needs to sign up for Medicare Part B NOW! Medicare needs time to get everything done in order for Medicare Part to be effective on November 1st.

He also needs to look at Medicare Advantage or Medigap to cover the 20% of expenses that Medicare Part B does not cover. I don't know anything about those policies as I was grandfathered into my company retirement health care insurance.

Your husband should look into SHIP (State Health Insurance Assistance Program). I believe every state has this program. They will be able to answer any questions about Medicare Advantage or Medigap insurance.

The rules have changed for getting SS spousal benefits. I believe if you were born after 1 January 1954, you can no longer only apply for SS spousal benefits. I think if you were born after 1 January 1954 & apply for spousal benefits, you will get your own SS or spousal benefits, whichever is higher. Maybe someone more knowledgeable can comment.

I got laid off from my job in January. Whenever I applied for a job on line, the application would not go through unless you listed the year you graduated from college. I'm sure when potential employers saw the year I graduated from college (1971), they looked no further. I did not receive any positive replies during the 7 months I applied for jobs. Maybe being only 65, your husband will have better luck.

bill

User avatar
Watty
Posts: 14338
Joined: Wed Oct 10, 2007 3:55 pm

Re: Hubby soon to be laid off

Post by Watty » Thu Sep 20, 2018 3:59 pm

The big question is what you expect your expenses to be in a few years when the house is paid off and you are both getting medicare.

There are lots of details but if you paid off the house you would still have around a million dollars and when you are much older you could tap your $700K in home equity if you need to. Unless your expenses are unusually high I suspect that you could both retire if you wanted to.
starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
He will get 6 weeks severance.
He will also likely get unemployment insurance. That would not be a lot but it would help.
starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
We were not planning on taking Social Security until he was at least 67 and I was 66- 2 more years. He would get $2625/month at that time and I am eligible for $950 on mine at 66 years but would take 1/2 of his instead when I turn 66?
When to start Social Security is complicated for a couple but it often makes sense for the higher earner to delay starting until they are 70. This not only give a larger check each month but it also may allow you to do Roth conversions for a few years in a low tax bracket before you start Social Security. A poster here has written a book on Social Security and he has a web page to help calculate when to start Social Security. There are other web sites that will also help you analyze when to start Social Security.

https://opensocialsecurity.com/

https://www.amazon.com/Social-Security- ... ade+simple

starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
I am not eligible for Medicare till next summer- I will need to buy insurance on the healthcare.gov site. Yikes! 800-900/month when I looked this morning for a single policy.
Unless he worked for a very small company you are likely eligible to continue health insurance with COBRA coverage and that is likely a lot better than an ACA policy. Some advantages are that you will not have to change doctors and you will not have to start your 2018 deductible all over again.

I would highly recommend the book "medicare for dummies" despite the title to help figure out the Medicare choices. Be sure you are looking at the most current edition.
starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
We live in HCOL area and will be staying here. My job depends on it. And we've been here forever: live in the northeast
Even if you do not want to move to a different area sometimes moving 20 or 30 minutes farther out of town will make a dramatic different in housing prices.

Most of the Northeast has very high property taxes. You might be able to move into a nearby area that has much lower property taxes too.
starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
$175,000 in taxable accounts invested at Vanguard...
Mortgage PIT is $2800/month @ 2.5% will be paid off in 4.5 years. ...
Owe $120,000
I would pay that off ASAP since there are only 4.5 years left on it. That will dramatically lower your monthly expenses and it will reduce the sequence of returns risk since the investments could drop a lot in the near future. If selling the investments in the taxable account would cause you to pay a lot of capital gains taxes you might be able to reduce that by waiting to sell them in January when the capital gains would be on your 2019 taxes.

Here is an example of the sequence of returns risk that I have posted before.
If you do not pay it off then you will have more sequence of returns risk. For example in rough numbers if you just kept a $100K mortgage and also put $100K into a separate investing account which you also pay a $500 a month mortgage out of then;

a) If you get unlucky and get a modest 10% decline in the portfolio the first year then it would be down to $90K
b) You would also need to pay the $500 a month mortgage($6,000) so your portfolio would be down to $84K
c) To break even the next year you would need to gain back the $16K and another $6,000 for the next years mortgage payments which is $22K. That would take a 25.6% return on the remaining $84K just to break even.

User avatar
Mlm
Posts: 294
Joined: Sat Apr 09, 2016 6:00 pm

Re: Hubby soon to be laid off

Post by Mlm » Thu Sep 20, 2018 4:19 pm

Meg77 wrote:
Thu Sep 20, 2018 3:18 pm
It sounds like you guys are doing pretty well. In fact this could be viewed as a bit of an opportunity. I wrote out a whole post but am deleting it because I came around to what I think is a better idea for you guys.

1. Use your taxable investments to pay off the mortgage. You'll still have 6 figures in cash/taxable brokerage, and your monthly expenses will drop significantly. Plus when (not if) the stock market corrects, you will sleep better at night knowing you sold near the highs to pay off your last liability and facilitate an earlier than expected retirement.

2. If you can't stomach pulling the trigger on that recommendation, leave the savings there and draw it down slowly as needed to pay the mortgage. Don't refinance! You have a great rate, and paying the home off by age 70 is prudent anyway. By then you can hopefully live off social security and your portfolio, especially without the mortgage.

3. I'm not sure he *needs* another job, at least not another job in the same field earning 6 figures - especially with the mortgage gone. It won't hurt to look, but if you were planning on him retiring in 2 years anyway I'm not sure it's worth the hassle to look for and get another similar job (stressful process) and get acclimated to a new environment and employer (which can take about a year and also comes with extra effort/stress). Besides it's a bit unfair to the potential new employer to retire promptly once you really get used to the new gig and start making a real contribution. That doesn't mean there aren't part time or other jobs he could do to bring in some extra cash of course, if you need/want that extra cash flow. But you could make it work with what you've got coming from your income and unemployment/social security as well.
I think Meg nailed it. I would not refinance. Get the house paid off and out of the way. The market is not your friend right now. Or if you have thought about down sizing in retirement, now might be a good time to start looking. I also lost my job two years before my planned retirement and it was not fun looking for a job at 62. Between a small severance, PTO paid out and unemployment I was able to make it work. Take a deep breath and slowly think this through together. I think you will be OK.

ponyboy
Posts: 590
Joined: Fri Feb 06, 2015 10:39 am

Re: Hubby soon to be laid off

Post by ponyboy » Thu Sep 20, 2018 4:38 pm

You have more than enough money to retire. Worst case sell the house, move to a lower cost of living area or downsize...and still profit $400k on the house after taxes.

Jags4186
Posts: 2538
Joined: Wed Jun 18, 2014 7:12 pm

Re: Hubby soon to be laid off

Post by Jags4186 » Thu Sep 20, 2018 4:42 pm

OP,

Not sure what your mortgage payment is, but based upon the information you provided the PI part of your payment is around $2350/mo correct?

You have 3 options:

1) continue to pay $2350/mo for 4.5 years
2) liquidate your taxable investments, pay your capital gains taxes, pay off mortgage
3) refinance to 30 year and lower your payment to about $608/mo

Personally, I would put it in order of 3,1,2 as I value liquidity. I also think you have a 30 year lifespan and you can still beat 4.5% long term with a conservative portfolio. Only you and your husband can decide what let’s you sleep well at night. Best of luck.

jminv
Posts: 576
Joined: Tue Jan 02, 2018 10:58 pm

Re: Hubby soon to be laid off

Post by jminv » Thu Sep 20, 2018 5:03 pm

Before he’s laid off, I would refinance the home to reduce the outflow and especially the associated stress while he searches for another position. My second choice would to be pay off the house.

starfish26
Posts: 4
Joined: Thu Sep 20, 2018 11:11 am

Re: Hubby soon to be laid off

Post by starfish26 » Thu Sep 20, 2018 9:51 pm

Thanks to everyone for such great advice. I knew I could count on this group to give me clarity. I need to take a breath and listen to others who can see through my cloud. I hope I’ve answered lots of the questions that you’ve had below.

Thanks for the info on Medicare and social security. I will order that book mentioned. I am such a neophyte on those issues as I thought I had time to learn about them- that time is now!

Here’s another piece of info I forgot to mention in original post. Our house is a Victorian 2 Family close to Boston that we aren’t currently renting; however, we could very easily. The apartment would easily rent for $1600/month. Our plan was to rent it out in retirement as another income stream. We could accelerate this and do it now. This is another reason we wouldn’t move

Will you husband be eligible for unemployment benefits? Hopefully short time if husband finds another job.
Yes he will be eligible for unemployment

Why is he being laid off? Problem of company, or industry? Will there be opportunities for him in his field?
They’re laying off 6 out of 20 in his group- not getting contracts although they kept saying there was work in the pipeline. There is still work “out there” I think in his field

Does he have a college degree? Could he teach school for a couple of years? Just brainstorming.....
Yes BS in Management information systems . Haha- definitely not a teacher. I’m a teacher and his idea of teaching is if you don’t understand something, he’ll just talk louder

What does it take to run the household for a month? Is it possible to reduce spending?
Our budget is $72,000/year and the mortgage represents $24,000 of that number. We have no debt other than mortgage. We could reduce budget: probably by 400-700/month: we spend about $300 on eating out/entertainment per month and another 100 paring down budget. I use Mint and Personal Capital to keep track of expenses and investments

Are you in your "forever" home? Would it be possible to downsize into something smaller? If you can downsize you might be able to stay in your area but cut your living expenses.
Don’t want to downsize now- I tutor students and my home is my base of operations. I love my job and my location is my client base.

Sounds like you could go down to one car. This will save you money now and then in retirement.
If my husband gets a job that’s not remote, we would want the 2nd car for commuting. Both cars only cost 1000 total per year insurance and hardly anything in maintenance: oil changes. Probably should keep both for now, I think

No offense, but why stay in a HCOL area for a job that only pays $30-$40K? Sell the house and that $120K mortgage becomes $200-$300K cushion for your portfolio.
I may be the only one with a job and it’s still $40K. all our family is here including very elderly parent. We’ve lived here forever

Would have to agree, 3600/yr for homeowner's insurance sounds crazy high
I know it does seem crazy high but I don’t think it is. We have to have replacement value insurance and we own a Victorian 2 Family house in a Boston suburb.

Cobra
Yes, he’s eligible for cobra- don’t know the cost yet. May also be crazy high
Your husband probably doesn’t need that much life insurance, but again it depends on your total expenses.
I was wondering about that…. We’re paying a good amount of money for that. I think we should keep our Long term Care insurance though? It’s $6500/year

I don't know why this is always such a common suggestion on this forum. Many people really like where they live and moving is a huge expense along with the hassle. OP is a long way away from needing to move just to pad their portfolio.
Thanks for this barnaclebob

Do you know if your husband will receive a severance package as part of the layoff? I was laid off in 2012 at a company I had been at for over 22 years and the package was substantial - it definitely accelerated my retirement plans. If so, might it be enough to get you guys close enough?
Yes- 6 weeks severance plus of course unused vacation which will be another week. He is being laid off the end of October so he will get checks through middle of December. Then unemployment I guess.

Meg77: you wrote Use your taxable investments to pay off the mortgage.
I was thinking that too. I hate refinancing our mortgage. I would love to finish the plans of paying off the mortgage in 4.5 years. Maybe just cash in money in taxable accounts as needed to pay mortgage monthly as suggested since our Mortgage interest rate is only 2.5%

Jminv wrote:
Before he’s laid off, I would refinance the home to reduce the outflow and especially the associated stress while he searches for another position. My second choice would to be pay off the house.
Still going back and forth with this.

User avatar
Watty
Posts: 14338
Joined: Wed Oct 10, 2007 3:55 pm

Re: Hubby soon to be laid off

Post by Watty » Thu Sep 20, 2018 10:14 pm

starfish26 wrote:
Thu Sep 20, 2018 9:51 pm
Our budget is $72,000/year and the mortgage represents $24,000 of that number.
If you pay off the mortgage then $72,000 - $24,000 = $48,000 in expenses.
starfish26 wrote:
Thu Sep 20, 2018 1:07 pm
We were not planning on taking Social Security until he was at least 67 and I was 66- 2 more years. He would get $2625/month at that time and I am eligible for $950 on mine at 66 years but would take 1/2 of his instead when I turn 66?
Yours would likely be half but you should confirm that.

$2625 + $1312= $3,937

12*$3,937 = $47,244 in Social Security (But delaying starting it is likely a good choice)

Social Security looks like it will virtually cover your expected expenses so while there are some details to figure out you are looking really good.

I suspect that your expenses may be a bit low though because of things like income tax, property tax, occasional large expenses like cars, roofs, etc. so be sure to factor those into your calculation. With having about a million in investments you should be able to cover those easily.

If one of you survives the other you would have only have one social security check but that should be easy to handle financially too.

Congratulations :beer

(I suspect that in a few years when the shock has worn off you will think that him getting laid off was one of the best things that ever happened to you.)
Last edited by Watty on Thu Sep 20, 2018 10:23 pm, edited 1 time in total.

User avatar
whodidntante
Posts: 4159
Joined: Thu Jan 21, 2016 11:11 pm

Re: Hubby soon to be laid off

Post by whodidntante » Thu Sep 20, 2018 10:23 pm

You probably have time to open a big HELOC and max that puppy. The uniform mortgage application asks how long you've been employed, but not how long you will be employed.

travelnut11
Posts: 310
Joined: Wed Dec 02, 2009 9:13 pm

Re: Hubby soon to be laid off

Post by travelnut11 » Thu Sep 20, 2018 10:30 pm

Why haven't you been renting out the second unit? $1600/mo would make a huge difference in your situation.
Travel is fatal to prejudice, bigotry and narrowmindedness ...and many of our people need it solely on these accounts. - Mark Twain | | Life is either a daring adventure or it is nothing. - Helen Keller

mountains
Posts: 27
Joined: Sun Jun 17, 2018 10:06 pm

Re: Hubby soon to be laid off

Post by mountains » Thu Sep 20, 2018 10:54 pm

Regarding life insurance: it should replace lost income that somebody else relies on if the if the insured dies. Given your portfolio and expected social security in a couple of years you probably no life insurance or just very little

JGoneRiding
Posts: 1180
Joined: Tue Jul 15, 2014 3:26 pm

Re: Hubby soon to be laid off

Post by JGoneRiding » Thu Sep 20, 2018 10:57 pm

Your husband is 65 and you have a mil in investiable assets. Take this as a sign and retire and downsize to your income/asset allocation.

mouses
Posts: 3810
Joined: Sat Oct 24, 2015 12:24 am

Re: Hubby soon to be laid off

Post by mouses » Thu Sep 20, 2018 11:14 pm

travelnut11 wrote:
Thu Sep 20, 2018 10:30 pm
Why haven't you been renting out the second unit? $1600/mo would make a huge difference in your situation.
Privacy and procrastination, I suspect, OP be very, very careful who you rent to. A bad tenant can be a financial nightmare and very difficult to get evicted.

SoAnyway
Posts: 196
Joined: Tue Jul 31, 2018 11:49 pm

Re: Hubby soon to be laid off

Post by SoAnyway » Thu Sep 20, 2018 11:25 pm

OP,

I'm sorry to hear about this little monkey wrench in the planning machinery, but I agree with the others: You'll both be fine. Perhaps not with as much cushion you'd planned for and would like, but no need to panic. You're so close. Kudos to you and DH for having laid the groundwork; it's those years of hard work and micro-decisions/micro-actions over those years that make this nowhere-near-the-disaster it might have been for others less disciplined.
A few random thoughts:

- In the near term, if I've read the thread correctly, you've got severance through December and then if needed, unemployment for 30 weeks at 50% avg. weekly wage IIRC MA rules; COBRA if not insanely priced for 18 months, and a great exchange if not (MA is one of the best - as you know, ACA was modeled on Romneycare); a year's worth of expenses covered by your EF; and last but not least, a great head on your shoulders (I'd expect no less from a BH teacher) since you're already looking for places to trim in your budget. ; )
- I would think that DH could find consulting work in MIS in the Boston area, but I recognize the ageism issues. It seems the coasts tend to be at the far right end of the "American youth culture" bell curve, but I digress.
- Renting out the other unit seems a no-brainer to me, esp. in Boston with so many students/grad. students/professionals, even better if you're close to a T train/bus line. Depending on your location, $1600 seems low to me; I think you could get more. What would it take to get that unit in shape for rental by Sept. 1, 2019 when 90+% of lease terms in the Boston area start? I have several friends in the Boston area who rent out rooms/units in the Boston area, btw. Feel free to PM me.
- I agree that refi/reverse mortgage are extreme measures that aren't warranted in your situation right now. And given the added info, relo to LCOL is off-the-table, unless things go REALLY wacky. All of those are great for Plan D, Plan E, Plan later. You're not there yet, as best I can tell.
- If your LTCI was purchased early enough to be a good a one, you should keep it. The "good ones" are harder and harder to get....
- I'll leave to others more knowledgeable the SS/Medicare matters - and how they impact the need for life insurance - as I'm not quite there yet (but studying!).
- As part of the mortgage-payoff analysis (which I'd lean toward doing in 2019 if you're cashing in taxable investments, but obviously do the math), I'd take a good look at your investment portfolio AA. Given how close you were on your prior path, I'm guessing it's pretty close to where you want to be but the equity piece has been trending higher of late, so it might be time to rebalance if you've not done so lately. Just make sure you're comfortable and staying the course.
- 2019 could actually turn into a tax-planning bonanza for you two if the chips fall right. For example, you might have space to do Roth conversions that you wouldn't have had otherwise, although you'll want to coordinate this with your SS/Medicare strategy.
- Bottom line: I totally agree with Watty: "I suspect that in a few years when the shock has worn off you will think that him getting laid off was one of the best things that ever happened to you." I'd only add that I suspect the same is true of DH. ; )
- Finally, OP: I'm delighted to see that you're maintaining your sense of humor amid this latest challenge:
starfish26 wrote:
Thu Sep 20, 2018 9:51 pm
Does he have a college degree? Could he teach school for a couple of years? Just brainstorming.....
Yes BS in Management information systems . Haha- definitely not a teacher. I’m a teacher and his idea of teaching is if you don’t understand something, he’ll just talk louder.
:sharebeer

Hubby clearly "married up". ; )

User avatar
jharkin
Posts: 1869
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Hubby soon to be laid off

Post by jharkin » Fri Sep 21, 2018 7:06 am

Payoff that mortgage, rent the apartment ... and go take a cruise. You guys are golden. :beer

BTW, I don't know who you use for insurance but if its not Amica, give them a call. They don't work through agents so you have to just call their main 1-800 number. http://www.amica.com

stan1
Posts: 5989
Joined: Mon Oct 08, 2007 4:35 pm

Re: Hubby soon to be laid off

Post by stan1 » Fri Sep 21, 2018 8:01 am

I think you can do this.

Most important:
that is not guaranteed because of ageism
It may be true but you and your husband are putting yourselves at a disadvantage if you go into the job search with that psychology. He does not need to work full time and doesn't really need benefits any more because he is eligible for Medicare and you can bridge to Medicare with COBRA or ACA. What are his skills? What is he good at? Help him package and sell himself. Encourage him to use his social and professional network. Encourage him to exercise and enjoy a hobby to keep a positive attitude. If he goes on in person interviews help him look 10 years younger (haircut, attire). He can't change his age but he can try to minimize the impacts by being enthusiastic with a positive attitude and looking younger than he is.

Rent the apartment.

COBRA or ACA - Price out both but think of it as a bridge for you to Medicare. It might come with a short term cost but you will only pay for it for less than a year.

Life insurance - Drop it unless you have a reason to believe life expectancy is low. You've paid into it, it served its purpose, and fortunately the insurance company came out ahead because you are both still alive. Don't think of it as you've already put a bunch of money into it therefore want to keep paying in.

LTCI - This is a tough one. Do you have a family history of dementia or nursing home care? I'd probably try to keep it if you've had it for awhile. If renting the 2nd unit or another job comes in you should be OK.

Mortgage - If you rent the 2nd unit I would not refi. You'll have the cash to pay it off as planned.

Homeowners - $300/month seems high but insurance is local and if that covers the rental unit also yet another reason to get the tenant. I'd get another quote.

Dottie57
Posts: 4632
Joined: Thu May 19, 2016 5:43 pm

Re: Hubby soon to be laid off

Post by Dottie57 » Fri Sep 21, 2018 8:17 am

jharkin wrote:
Fri Sep 21, 2018 7:06 am
Payoff that mortgage, rent the apartment ... and go take a cruise. You guys are golden. :beer

BTW, I don't know who you use for insurance but if its not Amica, give them a call. They don't work through agents so you have to just call their main 1-800 number. http://www.amica.com
Agree - pay off the mortgage. Never see that large payment again! And expenses will go down dramatically.

Good luck!

User avatar
CyclingDuo
Posts: 1774
Joined: Fri Jan 06, 2017 9:07 am

Re: Hubby soon to be laid off

Post by CyclingDuo » Fri Sep 21, 2018 8:19 am

starfish26 wrote:
Thu Sep 20, 2018 9:51 pm
Here’s another piece of info I forgot to mention in original post. Our house is a Victorian 2 Family close to Boston that we aren’t currently renting; however, we could very easily. The apartment would easily rent for $1600/month. Our plan was to rent it out in retirement as another income stream. We could accelerate this and do it now. This is another reason we wouldn’t move

Will you husband be eligible for unemployment benefits? Hopefully short time if husband finds another job.
Yes he will be eligible for unemployment

Do you know if your husband will receive a severance package as part of the layoff? I was laid off in 2012 at a company I had been at for over 22 years and the package was substantial - it definitely accelerated my retirement plans. If so, might it be enough to get you guys close enough?
Yes- 6 weeks severance plus of course unused vacation which will be another week. He is being laid off the end of October so he will get checks through middle of December. Then unemployment I guess.
I empathize with your husband's situation! I've been going through it myself after getting news this Spring of being laid off. It's not fun to go through for your husband, or for you as a couple. All the best in the coming months!

Start checking up on unemployment in Massachusetts with regard to severance and vacation pay. Every state is a little bit different on how they handle it and what is or isn't impacted with regard to also receiving severance/vacation pay. I would suggest spending the time now checking and learning exactly when he should file and what is needed. In my state, one files the first working day after the actual final day of work, not the last day of a paycheck or severance pay that could be weeks after his final working day. So again, just make sure you get that filing window correct so you don't miss that window. It is easy to get conflicting information, so go straight to the source (unemployment office) and get "in the know" now so everything is prepared.

Filing the weekly claim, applying for jobs each week (which is a requirement), interviewing, etc... became my "full time job" for the summer. Yes, I certainly felt the unspoken wrath of ageism, but kept chugging along at it vowing not to get deterred. I treated it like Ted Williams at the plate. Don't swing at everything, be patient, and if you get 3 or 4 hits out of 10 at bats - you'll be in the Hall of Fame. I also had to take some classes/courses at the unemployment office, tweak the resume, as well as do some required testing which, low and behold landed me a very nice transitional job in technology (after working in music and academia for the past 33+ years). I never would have even imagined that a few months ago, so you just never know what might be out there for your husband.

We would certainly recommend renting out that apartment if it is available now. That extra $1600 a month will vastly improve your situation.

It's a rather good time for finding part-time work - or rather transitional work. Even if it comes at a much reduced number of weekly hours and the obvious reduced pay, the extra income (even if it is only $1500-2500 a month) could help soften the blow over the next year or two to still keep you on your original track of retiring in a year or two. It will also go a long way to pulling your husband out of any emotional let down of being laid off.

All the best to him and to both of you in the coming months and years!
"Everywhere is within walking distance if you have the time." ~ Steven Wright

WhyNotUs
Posts: 1344
Joined: Sun Apr 14, 2013 11:38 am

Re: Hubby soon to be laid off

Post by WhyNotUs » Fri Sep 21, 2018 8:24 am

FWIW, I would keep a laser focus on Medicare/health insurance issue. The cost of private health insurance for those in their 60's is staggering.
My first target would be getting on medicare ASAP. If that requires a wait, then I would see what my company can offer through severance and COBRA.

Renting your apartment would take some of the pressure off of your husband's job search. Depending on the market for his skills, it could be a humbly experience due to ageism.

If you can stabilize things so that the pressure is not so great through solving health insurance and generating rental income, he may get a chance to stop and breathe and think about what he might like to do next without a sense of panic. Maybe something new and exciting is around the corner.
I own the next hot stock- VTSAX

lostdog
Posts: 1237
Joined: Thu Feb 04, 2016 2:15 pm

Re: Hubby soon to be laid off

Post by lostdog » Fri Sep 21, 2018 8:29 am

Pay off mortgage or downsize home to reduce your expenses. He can retire or semi-retire. Maybe semi-retire at first and see where you're at with a budget.

lstone19
Posts: 162
Joined: Fri Nov 03, 2017 3:33 pm

Re: Hubby soon to be laid off

Post by lstone19 » Fri Sep 21, 2018 8:36 am

starfish26 wrote:
Thu Sep 20, 2018 9:51 pm
Do you know if your husband will receive a severance package as part of the layoff? I was laid off in 2012 at a company I had been at for over 22 years and the package was substantial - it definitely accelerated my retirement plans. If so, might it be enough to get you guys close enough?
Yes- 6 weeks severance plus of course unused vacation which will be another week. He is being laid off the end of October so he will get checks through middle of December. Then unemployment I guess.
Check on when he really becomes eligible for unemployment. I have no idea about Massachusetts but where I am (Illinois), severance is not considered employment wages so unemployment can be collected simultaneous with severance payments. And any lump-sum vacation payouts are not considered wages either (neither earned but unused current year vacation nor the accrued for the next year which at least in some states, is vested and must be paid).

I was laid off in April 2017 structured as 60 days active employment (in lieu of 60 days layoff warning) and then an additional 18 weeks of severance. The company even made it clear to file for unemployment the day after the 60 days of active employment ran out. So even though in the latter part of June I received the first severance payment and the lump-sum vacation payout, I also was collecting unemployment.

billfromct
Posts: 775
Joined: Tue Dec 03, 2013 9:05 am

Re: Hubby soon to be laid off

Post by billfromct » Fri Sep 21, 2018 8:52 am

Unemployment in Mass is 50% of your salary up to $769/week maximum. Mass Unemployment does not take out SS & Medicare.

You can have up to 10% withheld for Federal income tax & up to 5% withheld for Mass state income tax.

You can't collect for the weeks you get severence unless you have to sign a release form stating you will not sue the company in order to get the severance amount.

There is only 1 unemployment office in the state, in Boston. Everything is done "on-line". There are regional "career centers" in most major cities/areas. I believe these "career centers" are outsourced by the state & someone there can answer unemployment insurance questions or your husband can make a phone appointment to talk to someone from Mass unemployment.

Your husband will have to make an appointment with the "career center" in order to continue to get unemployment benefits. I think that he to be done within a month or so after filling. The career counselor may require monthly or every 2 month visits. There is some training that the "career center" provides (resume writing, unemployment issues for seniors, etc) & I believe that training counts as one of the 3 weekly job applications required; he will need to verify this.

He will also need to keep track of his weekly job applications/other activities. He may be audited on this. There is a weekly log format on the Mass Unemployment website. It is easier to take the format & put it into an Excel spreadsheet.

Hope this gives you some insight in what needs to be done to collect Mass unemployment benefits.

bill

aristotelian
Posts: 4767
Joined: Wed Jan 11, 2017 8:05 pm

Re: Hubby soon to be laid off

Post by aristotelian » Fri Sep 21, 2018 8:55 am

Dottie57 wrote:
Fri Sep 21, 2018 8:17 am
jharkin wrote:
Fri Sep 21, 2018 7:06 am
Payoff that mortgage, rent the apartment ... and go take a cruise. You guys are golden. :beer

BTW, I don't know who you use for insurance but if its not Amica, give them a call. They don't work through agents so you have to just call their main 1-800 number. http://www.amica.com
Agree - pay off the mortgage. Never see that large payment again! And expenses will go down dramatically.

Good luck!
I agree. Mortgage is effectively leveraging debt to invest in the market. That can make sense when you have the security of income coming in, but this changes the calculus.

OP, if the mortgage was gone, would you take out a loan today to invest in the market?

stan1
Posts: 5989
Joined: Mon Oct 08, 2007 4:35 pm

Re: Hubby soon to be laid off

Post by stan1 » Fri Sep 21, 2018 9:06 am

aristotelian wrote:
Fri Sep 21, 2018 8:55 am
Dottie57 wrote:
Fri Sep 21, 2018 8:17 am
jharkin wrote:
Fri Sep 21, 2018 7:06 am
Payoff that mortgage, rent the apartment ... and go take a cruise. You guys are golden. :beer

BTW, I don't know who you use for insurance but if its not Amica, give them a call. They don't work through agents so you have to just call their main 1-800 number. http://www.amica.com
Agree - pay off the mortgage. Never see that large payment again! And expenses will go down dramatically.

Good luck!
I agree. Mortgage is effectively leveraging debt to invest in the market. That can make sense when you have the security of income coming in, but this changes the calculus.

OP, if the mortgage was gone, would you take out a loan today to invest in the market?
Difference here is they have are paying a mortgage on a rental property but it is not operating as a business right now. I would restart the business, get the cash flow and not pull money out of my retirement and taxable investment accounts to subsidize a business.

JBTX
Posts: 4087
Joined: Wed Jul 26, 2017 12:46 pm

Re: Hubby soon to be laid off

Post by JBTX » Fri Sep 21, 2018 9:15 am

lostdog wrote:
Fri Sep 21, 2018 8:29 am
Pay off mortgage or downsize home to reduce your expenses. He can retire or semi-retire. Maybe semi-retire at first and see where you're at with a budget.
100% disagree with this. It is a 2.5% mortgage. Hold on to that as long as you can. Having the additional liquidity is valuable, and you can keep in various short term low risk bond investments and basically incur little to no net expenses.

Post Reply